Total offers 'attractive' Rs 149.63 per share to Adani Gas shareholders

French oil major Total has made a cash offer of Rs 149.63 per share to Adani Gas’ public shareholders, according to a draft letter of offer shared with exchanges on Tuesday. The offer has been made in line with Total’s definitive agreement to acquire 37.4 per cent share in the company.

As the company continues to trade at a price higher that its peers in the same business, analysts call the offer an attractive one.

“Adani Gas stock is expensive when compared with peers. This makes Total’s offer an attractive one for those who wish to exit. For those who wish to continue holding the stock it is a word of caution that the stock is already expensive,” said an analyst who did not wish to be named.

Part of the cash offer, Total looks to acquire up to 277.1 million fully paid equity shares of the face value of Re 1 from Adani Gas’ public shareholders.

On October 15, Total signed a definitive agreement to acquire a 37.4 per cent stake in Adani Gas for about Rs 5,700 crore. As part of the agreement, Total will purchase shares in Adani Gas through a tender offer to public shareholders to acquire up to 25.2 per cent shares and purchase the residual shares from the Adani promoter family.

“The deal is overpriced from the buyer’s point of view. Adani Gas’ peers have a higher margin business mix compared with that of Adani Gas. Given that, the company is trading higher to its peers, the cash offer is a good one for retail investors,” said a second oil and gas analyst who did not wish to be named. The analyst added: “There is not much for institutional investors in this stock, as there is not enough free-float available for a true price discovery.”

Adani Gas closed at Rs 147.9 per share today, 2 per cent lower from its close on October 15, when the deal was announced. Meanwhile, share price for Indrapastha Gas and Mahangar Gas gained 4 per cent in the same period to close at Rs 381.6 and Rs 985.8 per share, respectively. “The Adani Gas deal announcement has given a sentimental push to the other stocks operating in the same segment,” said the second analyst quoted earlier.

Adani Gas has city gas distribution networks in Ahmedabad and Vadodara in Gujarat, Faridabad in Haryana, and Khurja in Uttar Pradesh. In addition, a consortium of Adani Gas and Indian Oil is developing gas distribution networks in Allahabad, Chandigarh, Ernakulam, Panipat, Daman, Dharwad and Udhamsingh Nagar.